THE CHALLENGE: Florida, well known for hurricanes and alligators, has another high-profile worry on its list: the possibility that the Earth could, at any moment, gobble up a house or two or even a whole block. Yes, Florida has more sinkholes than any other state in the nation. Our client had a front-row seat to this phenomenon after designing a football field for a private school in the Sunshine State that, soon after it was completed, began sinking. As the designer on the project, it wasn’t our client’s duty to check the area for any vulnerability for sinkholes. That job would have fallen to the engineers. Nonetheless, it found itself as one of the primary defendants in the case because, unfortunately, the other “lead” defendant was uninsured. To make matters worse, the insurance company, confident there was no liability, decided it would throw the dice and go to trial. Juries, sadly, are known to go after defendants with the deepest pockets. It was, in our view, a gamble too far, especially given that the damages sought far exceeded our client’s insurance policy limits.
OUR SOLUTION: We started by pressing our case with the carrier’s claims folks. Although in many cases we prevail, the insurer in this instance was adamant, unbending in its resolve to fight the case in court. Left with no choice, we advised our client that hiring an attorney to help make his case with the insurer would be advisable. We directed the client to a firm that we trust and, working with its lawyers, launched a new round of extended conference calls, letter-writing and more with the carrier. Among other points, we reminded the carrier of its long-standing relationship with our client. We also noted that this was the client’s first claim of any significance. Finally, we mentioned – not lightly – that it was beginning to look like the insurer was acting in bad faith.
THE OUTCOME: Under the law, insurance companies owe a duty of “good faith” and “fair dealing” to the persons they insure. Naturally, carriers hate to be reminded of this. Violating the good faith covenant can quickly land an insurer in court. Thus, rather than raise the stakes any further, the carrier agreed to allow mediation, a far-less expensive option that we felt would reasonably limit our client’s exposure. It took two years but, in the end, the case was settled for $450,000, significantly less than the damages sought and well under our client’s policy limits. He did have to pay for the lawyer who helped push the carrier into mediation, but, to everyone’s relief, his policy covered the much-higher costs of the mediation itself, as well as the settlement.
Related: Case Study – Raising Hail After the Storm
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